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The European Union unveiled a raft of measures aimed at cushioning what it said would be a deep recession in the region this year as a result of the coronavirus pandemic. The European Commission will use maximum flexibility in the bloc’s rules as well as steps to ensure liquidity for businesses that have been hit hard by the crisis.
Here’s what’s on the table:
- The commission said that any measures countries take to address the economic impact of the virus won’t be factored in the assessment of their deficits and compliance with EU rules.
- The commission will allow leeway in how governments aid companies, promising to move fast to approve subsidies for wages, tax payments and compensation to firms. It will also provide liquidity support for small businesses and potentially for banks.
- The commission said it can’t be ruled out that “otherwise perfectly healthy banks” will need state aid because of the current crisis. that means countries could provide help to lenders while avoiding “all the consequences” of rules that normally require investor bail-ins or restructuring. This could bolster banks suffering virus-related damage without burning investors.
- The bloc will set up a 37 billion-euro ($41 billion) corona investment fund. This will be made up of unused reserves from its budget, originally aimed to help poorer regions and can be deployed immediately to assist sectors in need.
- The EU’s own investment fund can be used to guarantee 8 billion euros of loans to 100,000 small-and-medium sized enterprises. Affected companies will be able to delay the repayment of their existing loans.
- The commission said it stands ready to recommend triggering a so-called “general escape clause” in case of a severe downturn in the region. That could accommodate a more expansionary fiscal policy for the bloc as a whole.
- In order to cushion the impact on workers and help preserve jobs, the commission said it would promote short-time work schemes, “upskilling” and “reskilling” programs and accelerate the preparation of a legislative proposal for a European unemployment reinsurance scheme.
- Airlines will be freed until at least June 30 from a requirement to use their airport slots. The commission recommended waiving for four months from March 1 an EU obligation that carriers use at least 80% of their takeoff and landing positions or risk losing them the following year. The proposed waiver, which needs the approval of EU national governments and the European Parliament, could be prolonged if necessary.
— With assistance by Aoife White, Alexander Weber, and Jonathan Stearns
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